Lawmakers fight to find Medicaid fix

CONCORD — Lawmakers said Tuesday they are working on an agreement to bring stability to health care funding in the wake of a court ruling that found the Medicaid Enhancement Tax unconstitutional.

“We should not leave here in June without having a fix,” said Sen. Bob Odell, R-Lempster, chair of the Senate Ways and Means Committee, “a fix that solves the problem the court decision identified.”

Hospitals argued they were being unfairly singled out to pay the tax; Hillsborough County North Superior Court Judge Philip Mangones agreed Thursday.

Mangones’ decision puts at risk $185 million in state revenue for the 2014 fiscal year.

The state is appealing the ruling to the state Supreme Court.

Lawmakers are discussing a settlement that includes the Medicaid Enhancement Tax, Medicaid expansion and a federal Medicaid waiver that would allow the state to collect additional federal money for services the state provides.

Republican senators, who helped craft the Medicaid expansion bill this spring, said it would reduce hospitals’ uncompensated care and avoid cost shifting to private insurers. With private insurers covering the 50,000 newly eligible adults under the state’s expansion plan, hospitals would receive at least 100 percent of the cost of services, unlike Medicaid.

Odell said one option lawmakers could explore is to expand the tax to health care providers such as private laboratories, radiology services and ambulatory surgery centers.

But Odell said he does not believe spreading the tax to non-hospitals is politically viable at this time.

Other options include applying the insurance premium tax to Medicaid bills, which would affect the three managed care companies the state hired to run its Medicaid program, but Odell said that would not provide enough money.

Odell said the Senate Ways and Means committee will hold House Bill 1613 until the end of the session. The bill would allow hospitals to make quarterly MET payments during the fiscal year rather than the one payment in November and the “true up” in July.

“We need to have an amendment and at some point a public hearing,” Odell said. “The impact on the public on something as large as this is significant and public input is very important.”

The MET began in 1991 as a way to match federal money to pay the state’s share for Medicaid services. The state then returned the hospitals’ MET money through the Disproportionate Share Hospital program to help hospitals that treat large numbers of Medicaid patients.

The state kept the federal money and used it to help balance its budget.

But in 2011, the federal government said states had to distribute the money based on a hospital’s Medicaid costs, not simply return the money.

At the same time, the then Republican-controlled legislature kept $130 million of the tax for the state’s general fund, rather than returning it to hospitals.

The effect was to stop reimbursing the state’s largest hospitals for uncompensated care, although the program continued for small rural hospitals.

Ten of the state’s largest hospitals sued the state over changes to its Medicaid program. The suit is pending in federal court.

One solution that could put the problem to rest is casino gambling, according to Senate Bill 366’s prime sponsor Sen. Lou D’Allesandro, D-Manchester.

He said the House Ways and Means Committee and House members need to realize the revenue the state would receive from the two casinos in his bill would provide almost as much revenue as the state would lose from the MET decision.

“(The ruling) just again emphasizes the need for revenue,” he said. “Given our antipathy for taxes, this is a non-tax source and it benefits everyone.”

The House Ways and Means Committee votes on the bill Thursday at 9:30 a.m. Earlier this year, the committee voted 13-11 to kill a similar bill, House Bill 1633.